Aydin v. Opteum Financial Services, LLC et al
Filing
58
MEMORANDUM & ORDER granting 49 Motion for Summary Judgment; For the foregoing reasons, Defendant's motion for summary judgment is GRANTED and Plaintiffs' Amended Complaint is DISMISSED in its entirety. The Clerk of the Court is directed to mark this matter CLOSED. So Ordered by Judge Joanna Seybert on 6/10/2014. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------x
HANIFE AYDIN and KIBAR AYDIN,
Plaintiffs,
-against-
MEMORANDUM & ORDER
10-CV-1907(JS)(AKT)
OPTEUM FINANCIAL SERVICES, LLC, a
subsidiary of Bimini Capital
Management, Inc.,
Defendant.
----------------------------------------x
APPEARANCES
For Plaintiffs:
Stephen A. Katz, Esq.
Stephen A. Katz, P.C.
111 John Street, Suite 800
New York, NY 10038
For Defendant:
Edward Michael Keating, III, Esq.
Patrick J. McStravick, Esq.
Ricci Tyrrell Johnson & Grey, PLLC
1628 J.F.K. Blvd., Suite 2000
Philadelphia, PA 19603
SEYBERT, District Judge:
Currently pending before the Court is defendant Opteum
Financial
Management,
Services,
Inc.’s
LLC,
a
subsidiary
(“Defendant”)
motion
of
for
Bimini
summary
Capital
judgment.
For the following reasons, Defendant’s motion is GRANTED.
BACKGROUND
I. Factual Background 1
At some point in time, plaintiffs Hanife Aydin (“Mrs.
Aydin”)
and
Kibar
Aydin
(“Mr.
Aydin,”
and
together,
“Plaintiffs”) decided to refinance their home at 703 Outlook
Avenue, North Babylon, New York.
(Def.’s 56.1 Stmt. ¶ 1.)
On
May 2, 2005, Mrs. Aydin wrote a letter to Defendant stating that
she wished to refinance the property in order to consolidate the
first and second loans already out on the property, pay off some
debts, make home improvements, and invest.
¶ 2.)
at
(Def.’s 56.1 Stmt.
According to Defendants, at that time the home was valued
$440,000
and
Plaintiffs
were
required
to
make
payments of $3,239.28 2 before the refinancing.
Stmt. ¶¶ 4, 7; Pls.’ 56.1 Counterstmt. ¶ 4.)
monthly
(Def.’s 56.1
Mrs. Aydin also
identified $41,488 in personal debt, requiring monthly payments
of $824.
(Def.’s 56.1 Stmt. ¶ 8.)
On May 18, 2005, Plaintiffs refinanced the property
with
Defendant.
created
a
single
(Def.’s
mortgage
56.1
Stmt.
for
¶
$352,000,
3.)
The
which
refinancing
paid
off
the
1
The following material facts are drawn from the parties’ Local
Civil Rule 56.1 Statement (“56.1 Stmt.”) and Counterstatement
(“56.1 Counterstmt.”) and the evidence in support. Where
relevant, the Court has noted specific factual disputes.
2
Although Plaintiffs dispute the exact accuracy of this amount,
they do not dispute that there were two loans requiring monthly
payments in approximately this amount. (Pls.’ 56.1 Counterstmt.
¶¶ 6-7.)
2
outstanding
mortgages
of
$276,212.75
payments from $3,239.28 to $2,054.18.
and
reduced
the
monthly
(Def.’s 56.1 Stmt. ¶ 11.)
Furthermore, according to Defendant, Mrs. Aydin left the table
with $58,717.75 (Def.’s 56.1 Stmt. ¶ 12), which was enough to
pay
off
Mrs.
Aydin’s
personal
(Def.’s 56.1 Stmt. ¶ 13.)
debt
with
$17,000
left
over.
The refinance was a conventional 30
year fixed-rate mortgage, with a fair and competitive rate of
5.75% and no adjustable rate mortgage (“ARM”), balloon payment,
or additional home equity line of credit (“HELOC”).
(Def.’s
56.1 Stmt. ¶ 16.)
The loan application signed by Mrs. Aydin lists her
income
as
$7,840
per
month.
(Def.’s
56.1
Stmt.
¶
18.)
According to Plaintiffs, Mrs. Aydin signed many documents at the
time of the closing without time to read them, and therefore
“she should not be held to the false statement of her income
. . . .”
(Pls.’ 56.1 Counterstmt. ¶ 19.)
II. Procedural Background
Plaintiffs originally commenced this action on April
28, 2010.
On September 6, 2010, Plaintiffs filed an Amended
Complaint against Defendant 3 alleging claims for: (1) violation
of
New
York’s
Deceptive
Practices
Act;
(2)
fraud
in
the
inducement; (3) violation of the Credit Repair Organizations Act
3
Plaintiffs also brought suit against Everhome Mortgage Company,
Inc., but the parties stipulated to its dismissal in December
2010. (See Docket Entries 13, 15.)
3
(“CROA”);
(4)
(“ECOA”);
violation
(5)
of
violation
the
of
Equal
the
Credit
Fair
Opportunity
Housing
Act;
and
Act
(6)
deprivation of civil rights in violation of 42 U.S.C. §§ 1981,
1982,
and
1985.
Although
Plaintiffs
sought
Complaint again, such request was denied.
to
amend
their
(See Docket Entries
19, 36.)
On November 18, 2011, Defendant properly moved before
the
Court
for
a
pre-motion
conference
motion for summary judgment.
in
anticipation
(Docket Entry 40.)
of
a
The Court held
a hearing on January 4, 2012 and set a briefing schedule for the
motion.
(Docket
Entry
43.)
Shortly
thereafter,
however,
Plaintiffs filed a suggestion of bankruptcy and moved to stay.
(Docket
Entries
44-45.)
resolution/discharge
Entry
46.)
The
of
stay
The
the
was
Court
granted
bankruptcy
lifted
on
the
stay
proceedings.
November
15,
pending
(Docket
2013
and
Defendant’s motion for summary judgment is now pending before
the Court.
(Docket Entry 48.)
DISCUSSION
The
Court
will
first
address
the
applicable
legal
standard on a motion for summary judgment before turning to the
merits of Defendant’s motion.
I.
Legal Standard
Summary judgment is only appropriate where the moving
party can demonstrate that there is “no genuine dispute as to
4
any material fact” and that the moving party is entitled to
judgment
as
a
matter
of
law.
FED. R. CIV. P.
56(a).
In
considering this question, the Court considers “the pleadings,
depositions, answers to interrogatories and admissions on file,
together with any other firsthand information including but not
limited to affidavits.”
Nnebe v. Daus, 644 F.3d 147, 156 (2d
Cir. 2011) (citation omitted); see also FED. R. CIV. P. 56(c).
“In assessing the record to determine whether there is a genuine
issue to be tried . . . the court is required to resolve all
ambiguities and draw all permissible factual inferences in favor
of the party against whom summary judgment is sought.”
Chrysler Corp., 109 F.3d 130, 134 (2d Cir. 1997).
McLee v.
The burden of
proving that there is no genuine issue of material fact rests
with the moving party.
Gallo v. Prudential Residential Servs.,
L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citing Heyman v. Com. &
Indus. Ins. Co., 524 F.2d 1317, 1320 (2d Cir. 1975)).
burden
is
met,
the
non-moving
party
must
“come
Once that
forward
with
specific facts,” LaBounty v. Coughlin, 137 F.3d 68, 73 (2d Cir.
1998),
to
demonstrate
that
“the
evidence
is
such
that
a
reasonable jury could return a verdict for the nonmoving party,”
Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S. Ct. 2505,
2510,
91
L.
Ed.
2d
202,
218
(1986).
allegations or denials will not suffice.”
781 F.2d 319, 323 (2d Cir. 1986).
5
“Mere
conclusory
Williams v. Smith,
And “unsupported allegations
do not create a material issue of fact.”
Weinstock v. Columbia
Univ., 224 F.3d 33, 41 (2d Cir. 2000), superseded by statute on
other grounds as stated in Ochei v. Coler/Goldwater Mem’l Hosp.,
450 F. Supp. 2d 275, 282 (S.D.N.Y. 2006).
II. Analysis
Defendants
Plaintiffs’
six
move
for
They
claims.
summary
argue,
judgment
inter
on
alia,
each
that:
of
(1)
Plaintiffs’ claims pursuant to New York’s Deceptive Practices
Act; the ECOA; the Fair Housing Act; and Sections 1981, 1982,
and 1985 are barred by the applicable statutes of limitations;
and (2) Plaintiffs have failed to produce reliable evidence to
establish their claims for fraud in the inducement and violation
of the CROA.
Initially, the Court notes that Plaintiffs do not
oppose summary judgment on their claims pursuant to New York’s
Deceptive Practices Act, the ECOA, the Fair Housing Act, and
Sections 1981, 1982, and 1985.
52, at 1.)
(Pls.’ Opp. Br., Docket Entry
Given the statutes of limitations on each of the
claims, that the facts involve events in 2005, that Plaintiffs
did not file the action until 2010, and that Plaintiffs do not
argue for any equitable tolling, Defendant’s motion for summary
judgment
on
these
claims
is
GRANTED.
Plaintiffs’
claims
pursuant to New York’s Deceptive Practices Act, the ECOA, the
Fair
Housing
Act,
and
Sections
therefore DISMISSED WITH PREJUDICE.
6
1981,
1982,
and
1985
are
Thus, the Court turns to Plaintiffs’ claims for fraud
in the inducement and violation of the CROA, each of which it
will address in turn.
A. Fraud in the Inducement
Defendant asserts that Plaintiffs cannot sufficiently
establish
their
fraud
in
the
inducement
claim.
Plaintiffs
counter that they relied on Defendant’s decision to lend to Mrs.
Aydin as constituting a determination that she could afford the
payments,
that
precedent
supports
Plaintiffs have been damaged.
their
position,
and
(Pls.’ Opp. Br. at 4.)
that
The Court
agrees with Defendant.
“To state a claim for fraud in the inducement, the
party
must
presently
(iii)
allege:
existing
reasonable
[plaintiffs];
and
(i)
or
a
past
reliance
(iv)
material
fact;
on
resulting
misrepresentation
(ii)
the
an
intent
to
of
deceive;
misrepresentation
damages.”
a
Silverman
by
v.
Household Finance Realty Corp. of N.Y., --- F. Supp. 2d ----,
2013 WL 4039381, at *5 (E.D.N.Y. Aug. 5, 2013); see also Karakus
v. Wells Fargo Bank, N.A., 941 F. Supp. 2d 318, 343-44 (E.D.N.Y.
2013) (plaintiffs must demonstrate “the basic elements of fraud,
namely [1] a representation of material fact, [2] the falsity of
that representation, [3] knowledge by the party who made the
representation
that
it
was
false
when
made,
[4]
justifiable
reliance by the plaintiff, and [5] resulting injury.” (internal
7
quotation marks and citations omitted)).
the
instant
case
is
similar
to
Defendant argues that
Hayrioglu
v.
Granite
Funding, LLC, 794 F. Supp. 2d 405 (E.D.N.Y. 2011).
Docket Entry 49-5, at 11.)
that
Plaintiffs
could
Capital
(Def.’s Br.,
Specifically, Defendant maintains
not
have
relied
on
misrepresentations
regarding Mrs. Aydin’s income because they did not read the loan
documents,
Plaintiffs
cannot
have
reasonably
relied
on
misrepresentations regarding Mrs. Aydin’s income, and Plaintiffs
cannot show damages.
The
similarities
Court
with
agrees
that
Haryrioglu.
this
There,
case
the
shares
plaintiff
many
asserted
that defendant “foist[ed]” a debt upon him that he could not
afford,
that
content,
he
generated
“that
solely
signed
the
the
documents
misstatement
by
the
of
defendants,”
but
his
never
monthly
and
that
knew
their
income
he
was
understood
defendant’s decision to issue him a loan “to be an affirmative
indication
that
he
could
assuming.”
Id. at 409.
part,
plaintiff
that
afford
to
repay
the
debt
he
was
In Haryrioglu, the Court found, in
could
not
have
relied
upon
regarding his income that he did not know existed.
statements
Id. at 413.
Even putting that question aside, however, here, as in
Haryrioglu, Mrs. Aydin was fully aware of her monthly income and
cannot have reasonably relied upon a misstatement that grossly
exaggerated
her
own
earnings.
Id.
8
at
413
(“[E]ven
if
the
plaintiff was aware of the statement, it certainly would not
have been reasonable for the plaintiff to rely on [defendant’s]
claim that his monthly income was approximately $7,000 more than
he believed it to be.”).
income
was
$1,042.50,
If, as Mrs. Aydin claims, her monthly
she
cannot
be
said
to
reasonably
have
relied on a statement that her monthly income was $7,840 and it
would have been obvious that mortgage payments of over $1,000
per month would exceed her income.
22.)
(Def.’s 56.1 Stmt. ¶¶ 18,
See Knox v. Countrywide Bank, --- F. Supp. 2d ----, 2014
WL 946635, at *6 (E.D.N.Y. Mar. 12, 2014) (“It is unreasonable
to rely on a lender’s misstatement of one’s own income, which
one knows to be false.”).
This is particularly so given that
Defendant did not conceal the terms or relevant information.
See Utreras
v.
Aegis
Funding
Corp.,
No.
13-CV-0291,
2013
WL
789614, at *3 (E.D.N.Y. Mar. 1, 2013) (given that defendants did
not misrepresent the size or terms of the loan, the plaintiff
“would have been in the best position to know the amount she was
able to pay per month for a mortgage and whether that amount was
sufficient to make her monthly payments under the terms of the
loan”).
The
same
misrepresentation
is
that
true,
Mrs.
then,
Aydin
for
could
Defendant’s
afford
to
alleged
repay
the
loan.
As in Haryrioglu, Mrs. Aydin does not dispute that she
signed
all
of
the
loan
application
9
materials
and
relevant
documents.
Haryrioglu,
794
F.
Supp.
2d
at
414.
This
is
significant in and of itself, even irrespective of Plaintiffs’
allegation
that
they
did
not
have
enough
time
to
read
the
documents.
See Marciano v. DCH Auto Grp., --- F. Supp. 2d ----,
2014 WL 1612976, at *6 (S.D.N.Y. Mar. 31, 2014) (“Plaintiff’s
contention
that
Agreement,
by
she
itself,
did
not
does
read
not
the
create
entire
a
Arbitration
material
factual
dispute, because a party who signs a document without any valid
excuse for having failed to read it is conclusively bound by its
terms.”
(internal
quotation
marks
and
citation
omitted));
Karakus, 941 F. Supp. 2d at 345-46 (finding that the plaintiff’s
claim that she did not have time to read the documents was
unavailing because she was capable of reading the documents, she
could have hired an attorney, and she could have requested an
adjournment of the closing).
In any event, “a few relatively
simple mathematical calculations would have revealed” that the
payment obligations exceeded income.
Haryrioglu, 794 F. Supp.
2d at 414; see also Karakus, 941 F. Supp. 2d at 346-47 (“To now
bring an action for fraud against Wells Fargo because it did not
reject their loan application smacks of chutzpah.”).
Accordingly, Defendant’s motion for summary judgment
on Plaintiffs’ fraud in the inducement claims is GRANTED.
10
B. CROA
Next,
Defendant
challenges
Plaintiffs’
claim
for
Defendant’s violation of the CROA primarily because Defendant
cannot be held liable for an alleged false statement made to
itself.
Plaintiff counters that Defendant is liable because the
CROA prohibits any “person” from making a false statement about
a
consumer’s
organization,
creditworthiness,
and
because
a
not
lender
just
can
a
credit
submit
application to itself and still be liable.
a
repair
false
loan
Again, the Court
agrees with Defendant.
“In relevant part, CROA provides that ‘[n]o person may
. . . make any statement . . . which is untrue or misleading
. . . with respect to any consumer’s credit worthiness, credit
standing, or credit capacity to . . . any person . . . to whom
the consumer has applied or is applying for an extension of
credit.’”
Karakus, 941 F. Supp. 2d at 336 (quoting 15 U.S.C.
§ 1679b(a)(1)
(alterations
in
original)).
The
CROA’s
purposes are:
(1) to ensure that prospective buyers of
services of credit repair organizations
provided with the information necessary
make an informed decision regarding
purchase of such services; and
the
are
to
the
(2) to protect the public from unfair or
deceptive advertising and business practices
by credit repair organizations.
Id.; accord Hayrioglu, 794 F. Supp. 2d at 415.
11
stated
Here, Defendant contends that, even assuming that it
made
an
untrue
or
misleading
statement
with
respect
to
Mrs.
Aydin’s creditworthiness, such a statement was made to itself,
and therefore it is not actionable under the CROA.
Plaintiffs
begin their opposition by arguing that Defendant can be held
liable
because
the
CROA
refers
credit repair organization.
question
repair
of
whether
organization
any
“person,”
not
just
(Pls.’ Opp. Br. at 10-12.)
Defendant
or
to
was
whether
it
“functioning”
can
indeed
be
as
a
The
a
credit
held
liable
under the CROA is a difficult one that has not definitively been
decided by courts in this Circuit.
Hayrioglu, 794 F. Supp. 2d
at 414-15 (“Federal district courts have disagreed as to whether
Section 1679b(a) of the CROA applies to lending institutions
. . . .
In the Court’s view, the statute is ambiguous on this
issue.”
(internal citations omitted)).
The
Court
need
not
decide
this
question,
however,
because even if Defendant could be held liable in this respect,
courts have made clear that an alleged misstatement to itself is
not actionable.
See, e.g., Kahraman v. Countrywide Home Loans,
Inc., 886 F. Supp. 2d 114, 124 (E.D.N.Y. 2012) (“This Court
agrees
that
internal
overstating
loan
approval
an
applicant’s
process
does
income
not
as
alone
part
of
constitute
an
a
violation of 15 U.S.C. § 1679b(a)(1).”); Hayrioglu, 794 F. Supp.
3d at 415.
Plaintiffs cite to Poskin v. TD Banknorth, N.A., 687
12
F. Supp. 2d 530 (W.D. Pa. 2009) for the proposition that a
lender can be held liable for a statement to itself under the
CROA.
(Pls.’ Opp. Br. at 13.)
Circuit,
have
flatly
However, other courts, in this
rejected
this
very
same
argument,
distinguishing Poskin and noting that it did not speak directly
to this issue.
See Karakus, 941 F. Supp. 2d at 338 (“While
plaintiffs assert that Poskin supports their position, defendant
correctly notes that the issue was never properly raised in that
case.”); Hayrioglu, 794 F. Supp. 2d at 415 (The Poskin “court
did not address the issue directly, and to the extent that its
holding is inconsistent with the Court’s present holding, the
Court
finds
that
decision
not
to
be
persuasive.”).
The
precedent is clear.
Moreover,
contrary
to
Plaintiffs’
contention,
a
determination that Defendant cannot be held liable under this
factual
scenario
accords
with--rather
than
contradicts--the
stated purposes of the CROA.
In fact, a false statement to
one’s
with
self
is
“inconsistent
statute’s purpose.”
the
description
Hayrioglu, 794 F. Supp. 2d at 415.
of
the
While
Plaintiffs assert that the misstatement was intended for others
to read, a prohibition on misstatements to one’s self does not
necessarily protect the buyer or the public.
Karakus, 941 F.
Supp. 2d at 338 (“It is hard, in short, to accept that Congress
intended CROA to impose liability on an entity based on purely
13
internal
statute
communications.
would
Defendant’s
defy
Any
common
motion
for
other
sense
summary
.
interpretation
.
.
judgment
.”).
on
of
the
Accordingly,
Plaintiffs’
CROA
claim is GRANTED.
As
summary
the
judgment
Court
on
all
has
of
granted
Defendant’s
Plaintiffs’
claims,
motion
it
for
will
not
motion
for
consider Defendant’s additional arguments.
CONCLUSION
For
the
foregoing
reasons,
Defendant’s
summary judgment is GRANTED and Plaintiffs’ Amended Complaint is
DISMISSED in its entirety.
The Clerk of the Court is directed to mark this matter
CLOSED.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated: June 10, 2014
Central Islip, NY
14
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